International Refugee Org. v. Republic Steamship Corp.

• Decision Date: 08 July 1950
• Docket Number: Civ. No. 4479.
• Citation: 92 F. Supp. 674
• Parties: INTERNATIONAL REFUGEE ORGANIZATION v. REPUBLIC STEAMSHIP CORPORATION et al.
• Court: U.S. District Court — District of Maryland

92 F. Supp. 674

INTERNATIONAL REFUGEE ORGANIZATION v. REPUBLIC STEAMSHIP CORPORATION et al.

Civ. No. 4479.

United States District Court, D. Maryland.

July 8, 1950.

Shea, Greenman, Gardner & McConnaughey, of Washington, D. C., and L. Vernon Miller and Franklin G. Allen, of Baltimore, Md., for plaintiff.

Ober, Williams, Grimes & Stinson, of Baltimore, Md., for defendants.

COLEMAN, Chief Judge.

This is a suit brought by International Refugee Organization (hereinafter called IRO), an unincorporated specialized agency of the United Nations concerned with the welfare of persons displaced by reason of the war, with its principal office in Geneva, Switzerland, against the Republic Steamship Corporation (hereinafter called Republic), a corporation of the Republic of Panama with its principal office there, and Jose Jacintho de Medeiros, a resident of Lisbon, Portugal and former President of Republic. Originally there were several other named defendants but service was never had upon them in Maryland, and a settlement being made with them in a like suit brought by IRO in the District Court for the Northern District of California against the same defendants, the present complaint has been dismissed as to these additional defendants.

Summarized, the causes of action, as set forth in the complaint are: (1) that Republic together with other defendants named in the complaint, through false representations made in connection with the charter of the steamship "San Francisco" by IRO from Republic in 1948, obtained from IRO funds in the amount of $840,000 and used these funds for purposes other than those for which they were advanced; (2) that the various named individual defendants were joint venturers, using the corporate form of Republic to deceive IRO, and failed to perform their obligations under the charter of the Steamship "San Francisco", as a result of which Republic and the other defendants became liable to IRO in the amount of $1,180,000; and (3) that Republic and its associates, the other named defendants, became constructive trustees, for IRO's benefit, of the return of certain premiums on policies of insurance covering the San Francisco and of supplies which were purchased for the vessel in Lisbon.

Republic has moved to dismiss the complaint first, for want of jurisdiction, claiming that IRO cannot bring itself within Sec. 1332 of 28 U.S.C.A. which provides: "(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $3,000 exclusive of interest and costs, and is between: (1) Citizens of different States: (2) Citizens of a State, and foreign states or citizens or subjects thereof; (3) Citizens of different States and in which foreign states or citizens or subjects thereof are additional parties."

Second, the motion to dismiss the complaint is based upon the claim that as respects Republic, the service of process was invalid because Republic had never qualified to do business within the District of Maryland; has never done business here, and has never appointed an agent here to accept service of process. As to Medeiros, it is contended that service upon him was, likewise, invalid because at the time of service he was in the Maryland District only temporarily in connection with other litigation. In addition, it is contended that the venue was defective as to both Republic and Medeiros. While we entertain some doubt with respect to the validity of the service and also as to the correctness of the venue, we consider it unnecessary to decide these questions because of the position which we take with respect to the broader and more important point which has been more extensively argued, namely, the question of jurisdiction of this court to entertain the suit in any event, assuming service and venue to be proper.

Since Republic is a Panamanian corporation with its principal place of business in Panama, and since, therefore, it is conceded that Republic cannot under any theory of jurisdiction be a citizen of any state or territory of the United States or of the District of Columbia, but is an alien defendant, it becomes necessary to determine just what the IRO is. If it also is an alien then, unless the present suit as disclosed by the bill of complaint is one arising under the Constitution, laws or treaties of the United States within the meaning of Section 1331 of Title 28 U.S. C.A. which provides that "The district courts shall have original jurisdiction of all civil actions wherein the matter in controversy exceeds the sum or value of $3,000, exclusive of interest and costs, and arises under the Constitution, laws or treaties of the United States," this court has no jurisdiction to entertain this suit because the District Courts have no jurisdiction of suits solely between aliens where no federal question is involved. See Kavourgias v. Nicholaou Co., Ltd., 9 Cir., 148 F.2d 96; Ex parte Edelstein, 2 Cir., 30 F.2d 636, certiorari denied, Edelstein v. Goodard, 279 U.S. 851, 49 S.Ct. 347, 73 L.Ed. 994; Doidge v. Cunard Steamship Co., 1 Cir., 19 F.2d 500; Cunard Steamship Co. v. Smith, 2 Cir., 255 F. 846.

What, then, is the IRO? As already stated, it is an unincorporated specialized agency of the United Nations, organized for the purpose of providing for the welfare of persons displaced as a result of the war. Article 104 of the Charter of the United Nations provides that "The Organization shall enjoy in the territory of each of its members such legal capacity as may be necessary for the exercise of its functions and the fulfilment of its purposes". 59 Stat. 1053. An identical provision is contained in Article 13 of the Constitution of the International Refugee Organization. See United Nations Conference on International Organizations, Documents Volume 13 pp. 104, 688. In his report on the San Francisco League of Nations Conference the Secretary of State said: "It is apparent that organizations like the United Nations which have offices and employees, will purchase supplies, and presumably rent or purchase office space, must have the legal capacity to enter into contracts, to take title to real and personal property and to appear in court (although its position as a defendant is protected by Article 105). The purpose of Article 104 is to make clear that the organization has legal capacity." See Senate Committee on Foreign Affairs, hearing on United Nations charter, 77th Congress, First Session, pp. 33, 134-135. The report of the Secretary of State made note of the fact that numerous agreements relating to other United Nations organizations contain a similar provision.

Next, Congress passed the International Organization Immunities Act of December 29, 1945, 22 U.S.C.A. § 288 et seq., implemented as respects IRO by Executive Order 9887, of August 22, 1947, 22 U.S.C.A. § 288 note, 12 F.R. 5723. This Act authorizes the President to designate the organizations, of which the United States is a member to which the privileges and immunities of the Act will extend. The organizations affected include the United Nations, Pan American Union, International Bank for Reconstruction and Development, in addition to IRO, as well as a dozen or more other international organizations of different kinds and of varying importance.

Section 2 (a, b) of the Act, 22 U.S.C.A. § 288a (a, b), provides as follows: "International organizations shall enjoy the status, immunities, exemptions, and privileges set forth in this section, as follows:

"(a) International organizations shall, to the extent consistent with the instrument creating them, possess the capacity —

"(i) to contract:

"(ii) to acquire and dispose of real and personal property;

"(iii) to institute legal proceedings.

"(b) International organizations, their property and their assets, wherever located, and by whomsoever held, shall enjoy the same immunity from suit and every form of judicial process as is enjoyed by foreign governments, except to the extent that such organizations may expressly waive their immunity for the purpose of any proceedings or by the terms of any contract. * * * "

Then Congress, by the Act of July 1, 1947, 22 U.S.C.A. § 289, authorized the United States to accept membership in the IRO. Section 1 of this Act, 22 U.S.C.A. § 289, which is the only section directly pertinent to the question before us, is as follows: "The President is authorized to accept membership for the United States in the International Refugee Organization (hereinafter referred to as the `Organization'), the constitution of which was approved in New York on December 15, 1946, by the General Assembly of the United Nations, and deposited in the archives of the United Nations: Provided, however, That this authority is granted and the approval of the Congress of the acceptance of membership of the United States in the International Refugee Organization is given upon condition and with the reservation that no agreement shall be concluded on behalf of the United States and no action shall be taken by any officer, agency, or any other person and acceptance of the constitution of the Organization by or on behalf of the Government of the United States shall not constitute or authorize action (1) whereby any person shall be admitted to or settled or resettled in the United States or any of its Territories or possessions without prior approval thereof by the Congress, and this joint resolution shall not be construed as such prior approval, or (2) which will have the effect of abrogating, suspending, modifying, adding to, or superseding any of the immigration laws or any other laws of the United States."

It follows from the foregoing chronology of the creation and promotion of the functions of the IRO, including its endorsement by act of Congress and the acceptance of membership in it by the United States, that the IRO is not (1) a foreign corporation; (2) a corporation of the United States or of any state; nor ...